5 Easy Tips on Risk Management: Forex Funds and Risk per Trade

Author: Denis Marsili

Author: Denis Marsili

In Forex it takes money to make money. As in any other speculative form of investment, Forex carries high risk that can potentially give high returns which are going to be relative to the funds you have in your account.

Since Forex is risky, inevitable losing trades are part of the game, you really need to learn to play the game by understanding its rules. The rules that determine the future of your funds: Risk Management.

Risk management is one of the most important skills that you can try to develop as a forex trader. It's even more important than any other technical skill, like technical analysis, since you can succeed without understanding every indicator showing up on your chart, but now without good risk management.

Consider these 5 easy tips and strategies on Risk Management: If your thinking about making huge amounts of money in a very short time your risk will be too high because with a small initial investment you can only make lots of money if you take huge risks and this move can wipe you out. Professional traders plan to handle the losses instead of dreaming of huge wins. Aim for a realistic profit goal and keep your trades very small while you're learning, protect your funds. If you don't wan't your funds to be wiped out you'll control your risk per trade and never let it go too high. Now we need to determine how high is too high... The big Forex traders keep their risk down to 1% per trade or even less. It's vital to protect your funds since you there's no way to get rich if you keep losing them. As your funds grow, you would gradually reduce the percentage risk, not the other way around. As a general rule, 5% of your funds is the most that you would risk on any trade. In most cases you'll want to go lower than that. 5% might work for small funds where you are prepared to take a chance that you might lose all of the money. You need good discipline and great money management to protect your funds in difficult times. Keep records of all of your trades. Your trading records can allow you to take back control whenever things seem to be going wrong, you'll defenitely have a huge advantage if you have results to analyze. When you're deciding on your position size, don't make variations according to intuition or to whether your previous trade was successful or not. You should consider your leverage and what percentage of your total funds will be committed to a trade. Remember thi is part of your risk management strategy. Losses should be accepted as a normal part of trading and you should plan for them in the sense that you always set up a stop loss when you open a trade. Include a stop loss expressed in terms of pips in your trading plan. Never have more than one trade at risk at a time. This means you shouldn't open a second trade until your first trade is in profit and you have moved the stop loss to a position where that first trade cannot lose.

If you have a very low starting fund you may want to increase your risk to probably more than 1% or 2% if your stop loss is being triggered too often. You will need a lot of patience, but if you have clear aims for your trading and understand the points in this article, you will put yourself in a good position to make profits from trading Forex online.About the Author:

Denis is posting tips for new forex investors you may find useful if looking for Trading Forex Easy Strategies.

For information on Forex Expert advisors: Easy Forex Advisor.

POST COMMENT

London is the Perfect Place for Frolicking with Friends Nintendo Dsi With R4 What to consider when buying Conservatory Blinds? Discover How To Hypnotize Anybody In 9 Seconds Or Less Download The R4 Dsi Creating Great Landscape Design On A Budget New R4 For Dsi Andaman and Nicobar Islands Dsi Stylus is Used on the Touch Screen of the Handheld System Rollup Banner Stands - Important Information Standard Prices And Places That Repair Windshields Help With Selling Using Worldwide Brands Venetian Blinds To Regulate Your Daylight Requirements